Home Sales Fall for 5th Straight Month
Sales of existing homes dropped for a fifth straight month in October as housing demand, one of the stars of this economic expansion, showed further signs of slowing.
The National Assn. of Realtors reported Monday that resales of single-family homes dipped 1.5% last month to a seasonally adjusted 3.97 million units.
Private economists said the decrease provided further evidence that the economy was slowing from its sizzling springtime pace. But in its latest quarterly outlook, the nation’s business economists said there appeared to be no danger that the slowdown could weaken into a recession.
In fact, a survey of National Assn. of Business Economists predicted that the economy’s performance over the next five years should look much like the last five years--moderate growth averaging 2.5% and inflation just under 2.9%.
“Moderate economic growth and low inflation will continue throughout 1997 and probably much longer,” the association said in a survey compiled from responses from 44 top forecasters.
Financial markets, which have soared to new heights since the November elections, gained more ground Monday. The Dow Jones industrial average surpassed the 6,500-point mark for the first time while bond yields fell.
NAR reported that the 1.5% decline in existing home sales followed an even bigger 2.7% drop in September. Existing home sales have been declining steadily since May.
For October, resales suffered their biggest drop in the South, a decline of 5.8% to an annual rate of 1.45 million units. But in the West, sales rose by 3.5% to an annual rate of 880,000 units.
Sales were up 10.3% in the Northeast to a rate of 620,000 units but fell 1% in the Midwest to an annual rate of 1.02 million units.
But housing industry officials noted that sales had hit a record high in May and even with the declines have remained at strong levels.
“This places us well on track to set a new resale record this year, surpassing the previous high of 3.99 million recorded in 1978,” said Russell K. Booth, NAR president.
The national median, or midpoint, price for homes sold in October was $116,400, a drop of 1.2% from a September median price of $117,800.
Paul Taylor, senior economist at America’s Community Bankers trade group, said that one potential trouble spot for the future is that the backlog of unsold homes rose to a 7.1-month supply at existing sales rates, a significant increase from the 6.4-month supply in September.
The bankers’ forecast said the economy, as measured by the gross domestic product, should expand by 2.3% this year and next, an outlook that was unchanged from the group’s September survey. The GDP grew 2% in 1995.
The survey predicted consumer prices would rise 2.9% both this year and in 1997, a slight increase from a 2.8% increase in the 1995 consumer price index.
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Home Resales
Seasonally adjusted annual rate, in millions of units:
October 1996: 3.97
Source: National Assn. of Realtors
